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A Legal Analysis of Koninklijke Philips Electronics N.V. v. Maj. (Retd.) Sukesh Behl & Anr.: Patent Enforcement and Infringement Liability

Introduction

The case of Koninklijke Philips Electronics N.V. v. Maj. (Retd.) Sukesh Behl & Anr. is a landmark judgment in Indian patent law, particularly concerning Standard Essential Patents (SEPs) and intellectual property enforcement. This judgment resolves three interconnected suits filed by the Plaintiff Philips relating to the infringement of Indian Patent No. 218255, which pertains to a “Method of Converting Information Words to a Modulated Signal”.

The judgment, delivered by the Delhi High Court on February 20, 2025, extensively examined the claims of patent infringement, counterclaims of invalidity, and the broader obligations of licensees under the legal framework of the Patents Act, 1970.

This article provides a detailed legal analysis of the case, focusing on the Court’s findings, the application of the Indian patent law, and the implications for future intellectual property disputes.

Legal Issues Considered by the Court

The Court was tasked with addressing several key legal issues:

  1. Whether the Plaintiff had proper authorisation to file the suit
  2. Whether the patent was valid under the Patents Act, 1970
  3. Whether the Defendants had infringed upon the Suit Patent
  4. Whether the Defendants were “unwilling licensees”
  5. Whether the Plaintiff was entitled to damages and other reliefs

Each of these issues was carefully analysed based on legal precedent, statutory provisions, and the evidence presented by both parties.

Maintainability of the Suit: The Question of Authorisation

One of the preliminary objections raised by the Defendants was regarding the maintainability of the suit. They argued that the Plaintiff had failed to demonstrate that the individual who filed the suit was duly authorised to do so. Specifically, they questioned whether Mr. Farokh N. Bhiwandiwalla, who signed the pleadings on behalf of Philips, had the requisite authority. The Defendants argued whether Mr. Bhiwandiwalla was a director of a different and distinct entity, One-Red LLC. During his cross-examination, he accepted that he had not seen the Board Resolution entitling Mr. E. P. Coutinho to further authorise him to institute the suits. Mr. Bhiwandiwalla merely referred to the general powers of the secretary under the Dutch law and the ordinary business practices, which the Defendants considered speculative and lacking substantiation through tangible evidence.

The Plaintiff countered this argument by submitting Powers of Attorney executed by Mr. Coutinho, who was authorised to act on behalf of Philips. The Plaintiff further relied on documents from the Dutch Trade Register to establish Mr. Coutinho’s authority.

The Court ruled that the Plaintiff had sufficiently demonstrated authorisation. It held that procedural objections regarding authorisation should not obstruct substantive claims unless there was a fundamental defect. Since the Defendants could not provide concrete evidence disproving the authority of Mr. Bhiwandiwalla, the suit was deemed maintainable. The Court noted that the Plaintiff, a company, has the capacity to sue and be sued in its own name and would necessarily act through individuals authorised to represent its interests in legal proceedings. Under Order XXIX Rule 1 of the Code, in cases involving corporations, the secretary, director, or other principal officers familiar with the facts of the case are empowered to sign and verify pleadings on the company’s behalf. Additionally, under Order XXIX Rule 1, a company, as a juristic entity, may validly authorise any person to sign a plaint or written statement on its behalf, satisfying the requirements of Order VI Rule 14. According to the Court, the lack of an express authorisation to institute, verify, and sign the pleadings or other legal documents can be remedied by a subsequent ratification by the corporation. Such a ratification can be explicit, such as resolutions of board of directors, or can be inferred from the conduct of the parties and circumstances of the legal proceedings. The Plaintiff’s prolonged involvement in these suits for over a decade exhibits its implied ratification of the actions of Mr. Bhiwandiwalla. Its endorsement is further manifest by the engagement of witnesses, specifically Mr. Bhiwandiwalla, submission of oral and documentary evidence, payment of Court fee, and consistent participation in the trial throughout the pendency of these suits. These factors lend credence to the authority of Mr. Bhiwandiwalla, which the Plaintiff had impliedly ratified.

Validity of the Suit Patent: Addressing Revocation Claims

The Defendants challenged the validity of the patent under multiple provisions of the Patents Act, 1970. The Suit Patent comprises 13 claims. Claims 1 to 11 and 13 involve a method of converting a series of m-bit information words into a modulated signal, where “m” is an integer. Each information word is converted into an n-bit code word, where “n” is greater than “m”. These code words are used to generate a modulated signal, according to the rules of conversion to satisfy a predetermined criterion. This technology is integral to Eight-to-Fourteen Modulation Plus (“EFM+”) coding, an essential feature in modern DVD systems. The EFM+ modulation enables encoding of 8-bit information words into 16-bit code words, thus providing an efficient system of transmitting information. The Suit Patent entails additional elements, including the process for recording, storage, transmission, and decoding of information.

Claim 12 of the Suit Patent, which is central to this controversy, covers the record carrier on which the modulated signal obtained by the method claimed in claims 1 to 11 is provided in a track.

Their primary claims were based on the following grounds:

Noncompliance with Section 8

Section 64(1)(m) provides for the revocation of a patent on the ground that the patentee has failed to disclose to the Patent Office the required information under Section 8 or has furnished materially false information. The Defendants argued that the Plaintiff had failed to supply information regarding foreign applications to the Indian patent office. The Court, in this respect, noted that since the errors in handling the disclosures ideally should have been avoided, they cannot be construed as a deliberate act of suppression by the Plaintiff. The Court also held that the Defendants failed to establish that the prosecuting attorney had knowingly witheld any material information or that the omission was intended to mislead the Patent Office. More importantly, the Court held that the Defendants did not demonstrate how the omitted details, if provided, would have altered the grant of the Suit Patent, particularly when the corresponding foreign applications remained valid and enforceable throughout the patent term. In contrast, the Plaintiff had placed evidence on record showing that, at the time of filing, the disclosures made under Section 8 were based on the best available data within its internal records. Given the dynamic nature of patent portfolios across multiple jurisdictions, the process of updating such records is inherently complex and subject to administrative oversight. According to the Court mere clerical or inadvertent error in updating foreign patent statuses, without any evidence of bad faith or intent to mislead, cannot be a ground for revocation.

Lack of Novelty and Lack of Inventive Step (Section 64(1)(e))

The Defendants argued that the patent lacked novelty and did not involve any inventive step based on prior art (a patent granted to Sony). The Plaintiff disagreed. The Suit Patent provides a EFM+ modulation, which is more than just an 8-to-16-bit conversion as provided in the Sony patent. It involves a specific set of rules and processes for encoding that allow unique identification of information words during decoding – elements absent from the cited prior art. The Plaintiff’s expert witness also clarified that that while the Sony Patent discloses a converter that receives 8-bit binary input signals and outputs 16-bit signals, it implements a different method of conversion compared to the method claimed in the Suit Patent and reinforces the Plaintiff’s position that the specific conversion methodology in the Suit Patent is distinct and not disclosed by prior art.

The Court, disagreed with the Defendants. It analysed prior art and found that while encoding techniques existed, the Suit Patent introduced specific improvements. The Court noted that for a patent to be invalidated on the ground of Novelty, the prior art must disclose every element of the claimed invention in the same arrangement and functionality. The Court also held that a mere resemblance in certain aspects is insufficient unless the prior disclosure is complete and enabling. Furthermore, the role of the Suit Patent in the development of the DVD standard and its resolution of technical limitations present in prior art reaffirm its novelty. The Court held that the Defendants had failed to demonstrate that any single prior art reference fully discloses the claimed invention with the same structure, operation, and effect.

Alleged Misrepresentation and Fraud (Section 64(1)(j))

The Defendants also contended that Philips had obtained the patent through misrepresentation and suppression of material facts.

The Defendant argued that the Suit Patent was presented initially as a Divisional Application stemming from the Parent Application bearing No. 136/CAL/1995. The Divisional Application was filed four years later, before the Chennai branch, and not the Kolkata branch of the Patent Office. The Parent and Divisional Applications ought to have been filed before the same branch of the Patent Office. Both the Divisional and Parent Applications are identical, with no discernible new claims being introduced in the Divisional Application, which is a prerequisite for filing a divisional patent under Section 16 of the Patents Act. Such discrepancies raise questions about the integrity of the filing process and suggest misrepresentation or concealment of facts. These facts should be considered as evidence of Plaintiff’s non-compliance with the statutory requirements for divisional applications.

The Court disagreed with this ground as well, for the following reasons:

  • The ground necessitates proof of a wilful act of misrepresentation or concealment. The Defendants had failed to fulfil the onus of furnishing clear and convincing evidence that the Plaintiff had engaged in fraudulent conduct or material misrepresentation.
  • Under Rule 4 of the 1972 Rules, the “appropriate office” for an applicant without a place of business in India is determined basis the address for service the applicant provides. In this case, the Parent Application was filed in Kolkata, where the Plaintiff was represented by Cantwell & Co., listing the address for service in Kolkata. Conversely, the Divisional Application for the Suit Patent was filed before the Patent Office, Chennai, with DePenning & DePenning as the agents on record, whose address for service was in Chennai. Since the jurisdiction for patent filings is determined by the address for service submitted by the applicant, as per the Court, the Plaintiff had adequately explained the reason for filing the Divisional Application before the Patent Office, Chennai. Also, on the date of filing of the application for the Suit Patent, there was no embargo under the Patents Act or the 1972 Rules on filing of a divisional application before a different Patent Office.
  • The Parent Application lapsed after the filing of the Divisional Application. Consequently, the Plaintiff had no legal impediment preventing it from filing the Divisional Application. The subsequent abandonment of the Parent Application due to efflux of time had no bearing on the validity of the filing or scrutiny of the Divisional Application.
  • The Plaintiff ensured that all necessary details regarding the Parent Application were available to the examiner during the scrutiny of the Suit Patent. This was evident from the clear reference to the Parent Application in Form 1 of the Divisional Application.
  • Plaintiff had thus demonstrated that it acted in compliance with the statutory framework and maintained transparency with the Patent Office. The abandonment of the Parent Application was not a result of any deliberate action on the Plaintiff’s part, but a legal consequence of non-prosecution within the statutory timeline. The absence of an express mandate to disclose reasons for abandonment, coupled with the compliance in submitting the Parent Application’s details upon request, supports the Plaintiff’s position that there was no suppression or misrepresentation during the prosecution of the Suit Patent. This procedural aspect highlights that the Divisional Application for the Suit Patent was filed in accordance with the statutory framework in place, at that time.
  • The Divisional Application leading to the Suit Patent was lawfully derived from the Parent Application, in terms of Section 16. The Parent Application originally disclosed multiple aspects of the inventive concept, necessitating the segregation into separate divisional patents, and there is no evidence of procedural impropriety or double-patenting. Hence, this ground of invalidation of the Suit Patent was rejected.

Insufficiency of Disclosure (Section 64(1)(h))

Another major argument was that the patent specification failed to provide a clear and complete description of the invention, making it difficult for a person skilled in the field to implement the technology.

The Court ruled that the patent provided adequate disclosure, allowing skilled professionals to reproduce the invention without undue difficulty. The complete specification of the Suit Patent had laid out the invention clearly, including the method of encoding and the structure of the record carrier. The technical description provides a step-by-step breakdown of the modulation process and the rationale for using the EFM+ coding technique. The Court also held that the Defendants failed to show any evidence that a skilled person in the field of optical disc technology would be unable to implement the invention using the provided disclosure. The cross-examination of expert confirmed that the Suit Patent details the coding process sufficiently, allowing manufacturers to adopt and implement the technology. The best method of performing the invention was disclosed to the extent known at the time of filing. Therefore, the claim of insufficiency was rejected.

The Defendants also challenged the Patent as being not patentable under Sections 3(k) and 3(m) of the Patents Act. The Court, however, disagreed and held that the Suit Patent, while involving algorithmic processes for converting information words to code words, operated in conjunction with hardware elements that facilitated the modulation and storage of digital signals. The Suit Patent claims, though involving software-driven processes, contributed to technical advancement in the field of data modulation and storage. Therefore, the Court held that the Defendants’ objection that the Suit Patent was unpatentable because it relied on known or general-purpose hardware must fail.

Further, the Court also considered that Suit Patent was essential for DVD technology, based on witness testimony, claim mapping, and technical analysis. The Court held that the Plaintiff had convincingly demonstrated that the claims of the Suit Patent align with the DVD Standard, making its implementation unavoidable for any manufacturer adhering to the standard. The Defendants had failed to present a credible defence to challenge this essentiality. They neither proposed an alternative mechanism that bypasses the Suit Patent nor demonstrated that the DVD Standard could be implemented without infringing it. The Court further noted that the Plaintiff’s expert testimony, reinforced by the claim chart analysing the Suit Patent claims, remained uncontroverted.

Patent Infringement: Did the Defendants Violate Philips’ Rights?

Understanding the Infringement Claims

The primary allegation was that the Defendants, engaged in DVD replication, were using Philips’ patented EFM+ technology without a license. Philips argued that EFM+ was an essential technology for DVD replication, and any manufacturer producing DVDs in compliance with industry standards would necessarily use the patented method.

Defendants’ Counter-Argument: Outsourcing and Licensing Issues

The Defendants denied infringement, arguing that they merely replicated DVDs using pre-encoded stampers sourced from third-party vendors. They contended that they did not directly perform the patented encoding process and, therefore, could not be held liable.

Court’s Findings on Infringement

The Court ruled against the Defendants. Upon a careful analysis of the claims and specifications, the Court concluded that claim 12 of the Suit Patent was not restricted to discs produced through any particular manufacturing process, such as laser burning, nor was it confined to a specific technological method. Instead, it broadly encompassed any record carrier that incorporated the encoded EFM+ signal, irrespective of the method of creation. This distinction between the process of manufacturing and the existence of a product was clearly articulated in the complete specification of the Suit Patent.

As per the Court, the broad language of claim 12 implied that any record carrier containing the EFM+ modulated signal, regardless of the method of creation, fell within the scope of the Suit Patent. This interpretation countered the Defendants’ argument that their replication process did not infringe because it only reproduced content from a master DVD, and did not involve the original burning or encoding process. The Plaintiff’s claim rested on the presence of the EFM+ modulated signal within the replicated product, which aligned with claim 12’s requirements.

Further, the Defendants’ replication process involved discs that incorporated the EFM+ modulated signal, which directly infringed the Suit Patent. All stages of the Defendants’ replication process – from stamper production to the final DVD – fell within the scope of the Suit Patent’s claims. Furthermore, under Section 48 of the Patents Act, the patentee holds the exclusive right to prevent third parties, from using the patented process or from selling products obtained directly from that process, without their consent. Consequently, the Plaintiff was entitled not only to prevent the use of its patented method, but also to stop the sale of DVDs produced using the patented process by the Defendants.

The Court also held that there was infringement as on analysis of the uncontroverted evidence adduced by the Plaintiff, and material on record, it was clear that the DVDs produced by the Defendants conform to the DVD Standard. Therefore, the Defendants had infringed the Suit Patent, which was an SEP.

The Concept of “Unwilling Licensees” and FRAND Obligations

Philips had offered to license the patent on Fair, Reasonable, and Non-Discriminatory (“FRAND”) terms, but the Defendants refused to enter into a licensing agreement.

As per the Court, the evidence adduced clearly demonstrated that the Plaintiff, as the owner of an SEP, made diligent and repeated efforts to offer the Defendants a license under FRAND terms. In the letters addressed to all these Defendants, the Plaintiff clearly outlined its licensing framework, giving the Defendants the option to either procure a “Philips Only” license, or a joint license covering the portfolio of patents owned by Plaintiff, Sony, Pioneer, and LG. The communication further detailed the proposed royalty rates and enclosed a DVD License Agreement, leaving no ambiguity regarding the Plaintiff’s willingness to license the Suit Patent on non-discriminatory terms. The Defendants did not deny the issuance and receipt of these communications, thus reinforcing the conclusion that the Plaintiff met their FRAND obligations.

The Court held that:

  1. The Defendants were aware of the licensing requirement but chose to operate without obtaining the necessary rights.
  2. Their refusal to take a license indicated bad faith and non-compliance with FRAND principles.
  3. Their status as “unwilling licensees” further strengthened the case for infringement damages.

Relief Granted: Injunctions, Damages, and Legal Costs

Based on its findings, the Court granted the following reliefs to Philips:

  1. Permanent Injunction: The Defendants were restrained from manufacturing, selling, or distributing DVDs using the patented technology without obtaining a proper license.
  2. Monetary Damages: The Defendants were ordered to compensate Philips for losses incurred due to infringement. The amount was computed based on evidence of production and sales data.
  3. Litigation Costs: The Defendants were directed to bear the full legal expenses the Plaintiff had incurred.
  4. Patent Validity Affirmed: The Registry was instructed to maintain the validity of the patent and dismiss all revocation claims.

To calculate the damages, for instance, in one of the suits the judgment had disposed off, the Court estimated the number of DVDs the Defendants had replicated to be 4,99,30,000 (Four crore ninety-nine lakh thirty thousand only) during the relevant period. Applying the FRAND rate of 0.03 USD per DVD,[1] the royalties due to the Plaintiff would be USD 14,97,900 (Fourteen lakh ninety-seven thousand nine hundred only), which when converted into Indian Rupees at the exchange rate of INR 83 per USD, brought the total royalty damages to in INR 12,43,25,700 (Twelve crore forty three lakh twenty five thousand seven hundred only). Further, interest at the rate of 12 per cent per annum was applied on this amount from the date of filing of the suit until the date of full payment. Accordingly, the suit was decreed in favour of the Plaintiff, and a decree passed for a sum of INR 12,43,25,700 (Twelve crore forty-three lakh twenty five thousand seven hundred only), along with interest at 12 per cent per annum from the date of filing of the suit, till the date of final payment. Further, the egregious conduct of the Defendants, including wilful infringement, deliberate non-disclosure of sales records, and procedural misconduct, warranted award of additional damages of INR 1,00,00,000 (One crore only).

Conclusion: A Strong Precedent for Patent Enforcement in India

This judgment has significant implications for patent enforcement in India, particularly in cases involving Standard Essential Patents. The ruling reinforces the obligation of businesses to comply with licensing requirements and sets a clear precedent for holding “unwilling licensees” accountable. By upholding the validity of the patent and awarding substantial damages, the Court has sent a strong message about the importance of intellectual property rights in fostering innovation and protecting patent holders from unauthorised exploitation.

[1] The Court relied on uncontroverted evidence establishing that the Suit Patent was licensed at a uniform and commercially viable rate, the Court found that the standard royalty rate for the Suit Patent stands at USD 0.03 per DVD. Consequently, damages were computed on the basis of this established rate in all the three suits.